China’s carriers increase international routes to meet growing demand

After breaking the 100 million-trip benchmark last year the market and registered an additional 10% y-o-y growth in Q1 this year.

China’s carriers are vying to add international services to capitalize on the growth potential of China’s outbound travel market as the market heats up further. After breaking the 100 million-trip benchmark last year the market and registered an additional 10% y-o-y growth in Q1 this year.

Major carriers lead the outbound trend

Air China plans to open new routes to Europe, Australia, New Zealand, North America and Japan, using Beijing and Hangzhou as hubs. It is planning to operate 362 routes for passenger flights this summer and autumn, of which 91 will be international routes, up from 82 as at the end of last year. The international service expansion plan for this year is the carrier’s most ambitious yet.

China Southern Airlines has been rapidly expanding its international air routes in the last two years and is planning more new routes this summer and autumn. On the drawing board are new long-haul services from Guangzhou to San Francisco, Mexico, Nairobi and regional services from Guangzhou and Shenzhen to Krabi, Koh Samui, Nha Trang and Bangkok.

It will also increase services on its existing routes from Guangzhou to New York, Los Angeles and Melbourne. As well, the carrier plans to deploy the bigger A380 planes for the Beijing-Amsterdam route from June to boost the capacity for the route.

China Southern’s subsidiary Xiamen Airlines is set to inaugurate its first international air route from Xiamen to Amsterdam in July. Earlier, Xiamen Airlines, China Southern and KLM have formed a close partnership to bolster China Europe aviation code exchange services.

Hainan Airlines will launch four routes this year– from Chongqing to Rome, Beijing to San Jose, and Shanghai to Boston and Seattle. It also signed a purchase agreement with Boeing for 30 787-8 aircraft in March to fly its international routes.

The rapidly expanding short-haul travel to Korea and Japan has prompted more Chinese carriers to launch or expand services to these destinations. Spring Airlines takes the lead to explore the potential of services to the regional destinations, while other carriers including Shenzhen Airlines, Lucky Air, Shandong Airlines and Sichuan Airlines are planning to launch services to Japan and Korea this year.

Expanding international air routes increases revenue

China Southern boasts the highest growth rate for the international routes among China’s top three carriers, having achieved 20.46% growth in operational revenue at RMB22.9 billion (approx: US$3.7 billion) last year. A manager of China Southern’s sales department said the carrier’s international air routes currently maintain an average load factor above 80%.

Air China, meanwhile, is still the top earner in international services, having chalked up international passenger services revenue of RMB25.294 billion (approx: US$4 billion) last year and achieved growth at above 10% for all of its international routes.

Though trailing behind the two market leaders, China Eastern Airlines still achieved 6.72% growth for the income from its international services last year. Hainan Airlines also recorded RMB 4.068 billion (approx: US$657 million) revenue from international routes last year.

Spring Airlines registered 63.13% in revenue growth for its international services after ramping up services to Japan, Korea and Southeast Asia, though the growth was from a small base and aggregated to just RMB948 million (approx: US$153 million).

The industry-wide growth in revenue is a direct result of the carriers’ investment in boosting capacity. Spring Airlines deployed 59.6% more capacity for its international services, while Air China, China Southern and China Eastern put on an additional 17.5%、16.82% and 5.37% respectively in terms of available seat kilometers (ASK) on international air routes.(Translation by David)